Reverse Mergers

We assist privately-held businesses in gaining access to the public markets through reverse mergers.

TAKE YOUR COMPANY PUBLIC

Tapping the liquidity held of the financial markets can be done very rapidly by reverse merging into a public shell corporation. We provide the expertise in deal-structuring and regulatory oversight to ensure your company enhanced liquidity. By reverse merging a private company with a public shell corporation, your nascent business can tap the financial markets for opportunities and faster growth.

Our expert array of specialized services ensure your merger is performed as seamlessly as possible. We also ensure your ongoing regulatory compliance is met with both the SEC and FINRA.

THE COST OF GOING PUBLIC

We specialize in taking companies public without taking them to the cleaners. In fact, for the right deals, we’ll take your company public for free. Granted, we’re pretty picky on the types of firms, players and opportunities in which we’ll personally invest. If the opportunity is a fit for a good public company, our team will commit our own resources to the process.

Otherwise, the cost of going public–excluding the audit and some legal costs–can run anywhere from $50,000 to $400,000. The cost is most often dependent on the speed requirements of being public. If we don’t decide to represent you or invest in you directly, the costs of going public–including your company audit–generally run between $60,000 and $80,000. This process can take between six and eight months. If you wish to move more quickly, expect to pay more.

There are many roads to Rome. Not all public companies become public in the same way. We take a very tailored approach with each client engagement, ensuring your public offering fits within your company goals and management’s allotted budget.

THE RISKS OF REVERSE MERGERS

In large metro areas like New York City, it is still possible to find practitioners of the old “three shell game”, in which the person placing the bet is always certain he knows where the little rubber pea is. Unfortunately, a bit of sleight of hand always insures that the operator ultimately wins the game. Buying a publicly trading shell is equally treacherous. The usual reason the trading entity is a “shell” is because something died inside. There are all sorts of problems that can crop up unexpectedly, the most common being a lot more shares in the marketplace than were disclosed. In spite of this, “reverse mergers” are still the most common way that companies become publicly traded.

There are several ways of becoming publicly traded. Some are not well known. For example, a federal bankruptcy court can literally create multiple shells out of pretty much “thin air”, as part of a Chapter 11 bankruptcy solution. We know attorneys who specialize in this process. Another way of “going public” is utilizing a “spinoff” which means a company becomes a subsidiary of an existing public company which then spins off the subsidiary along with its shareholder base which creates a new public company.

The most common reverse merger is probably the most dangerous. There are usually hundreds if not thousands of publicly traded companies which have little or no business and are therefore considered “shells”. Some shells are a lot better than others. Novices quite often purchase one of these and discover that there are a lot more shares out than they were told, or there are options, warrants, and/or different classes of stock with rights which once exercised, can destroy the company. There are some bargains to be had, in this arena but it is important to have the right legal and analytical help in “cleaning up” the shell, a process that is usually required. Unfortunately, the bigger law firms often know the least about the public markets particularly on the “micro cap” (penny stock) level. The most knowledgeable experts are often one man law firms with many years of experience with this type of entity. Good ones are hard to find.

Probably the best shells are “virgin shells”, meaning there has never been a real operating company inside. It is possible to purchase a new, trading public company that is more or less pristine and a good vehicle for a strong merger company. At the present time, the price of this type of shell is $350,000 to $400,000 which buys upwards of 90% of the issued stock. These are “fully reporting” and are not “pink sheets” (companies that are not fully reporting and are a playground for criminals). If someone wants more than this amount for a trading company (unless there is a lot of cash inside) they are taking advantage of the buyer, in our opinion. If someone wants less, there are usually undisclosed problems.

One of the least expensive ways of going public with a reverse merger, without all the risks is by purchasing control of a “SPAC” also known as a “419”. This is a company which has been created specifically as a virgin shell (CLICK HERE for more on public shells). The ones we recommend (and can help create) are fully reporting, registered S-1 companies with SEC approval.However, we typically recommend direct public offerings in lieu of reverse mergers.

There are many ways to play the shell game, but professionals do not gamble. They know they are going to win before they put up money.

With each client engagement we maintain rigorous and disciplined adherence to pre-determined end goals, delivering expert results throughout a vague, fragmented and difficult process.